For-profit cosmetology college blames impending closure on 90/10 rule changes

Higher Ed Dive

Natalie Schwartz

May 27, 2023

Dive Brief: 

• Queen City College, a roughly 40-year-old for-profit barber and cosmetology school in Tennessee, announced last week that it will close in early 2025, saying it cannot meet the requirements of impending government regulations.

• In an email, Brandie Gross, chief administrator and institutional director at the college, cited upcoming changes to the 90/10 rule as the reason for closing. These rules, which take effect in July, further limit how much revenue for-profit colleges can derive from federal financial aid.

• “Upcoming governmental regulations have forced us to make this gut-wrenching decision,” the college said in an announcement via Facebook. “These new required ‘metrics’ are impossible benchmarks that we painstakingly will never be able to meet.”

Dive Insight: 

Last year, the U.S. Department of Education made changes to the 90/10 rule, which requires for-profit colleges to derive at least 10% of their revenue from sources other than federal financial aid.

For-profits have been allowed to count military education funds, such as those from the GI Bill, as part of the 10% share — a policy that some observers say has led them to aggressively recruit veterans. The new regulations taking effect this summer will instead count military education funds in the 90% share, a move that some have heralded as closing a long-standing loophole.

Queen City College logged around $929,000 in revenue in fiscal year 2021, according to government data. About 59% of it came from Title IV federal financial aid, which includes student loans and Pell Grants.

Along with no longer being able to count education benefits from Veterans Affairs in its 10% share, the college will not be able to include revenue from its programs that don’t qualify for federal financial aid, Gross said.

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